never give up because great thing take time

1. BUSINESS LAW
TOPIC OF ASSIGNMENT: LAW OF PARTNERSHIP
“Talents wins games, but team work and intelligence win
championship”

2. GROUPS MEMBERS:
AYESHA WAHID
SHAMEEM ARA
MUNEEZA SHER
LAIBA MUKHTAR
SUBMITTED TO:
MISS UZMA ANEES
JINNAH UNIVERSITY FOR WOMEN
DEPARTMENT OF COMMERCE
5C ،Block 5 Nazimabad, Karachi, Karachi City, Sindh 74600

4. Contents
LAW OF PARTNERSHIP............................................................................Error! Bookmark not defined.
CHARACTERISTICS OF PARTNERSHIP....................................................................................................5
FIRM’S NAME.....................................................................................................................................6
TYPES OF PARTNERSHIP......................................................................................................................6
PARTNERSHIP DEED............................................................................................................................7
KINDS OF PARTNERS...........................................................................................................................8
REGISTRATION OF FIRM:.....................................................................................................................9
RIGHT OF PARTNERS.........................................................................................................................10
DUTIES OF PARTNERS:......................................................................................................................11
LIABILITIES OF PARTNERS..................................................................................................................13
DISSOLUTION OF FIRM......................................................................................................................14
CONCLUSION....................................................................................................................................17

5. LAW OF PARTNERSHIP
The law of partnership is contained in the partnership Act 1932. It came in to force on 1st October,
1932. It extends to the whole of Pakistan. [Sec. 3]
Meaning and Definition:
A partnership is a voluntary association of two or more person, who contribute, money,
property, time skill to carry for profit and to share the losses of the business.
Some definitions of partnership are as under:
USA Partnership law:
‘‘An association of two or more person who carry on as co-owners, a business profit”.
Prof. Haney:
‘‘Partnership is the relation existing between person to make contracts who agree to carry on lawful
business with a view to private gain”
Kimball and Kimball:
“A partnership is a group of men who have joined capital or services for the prosecuting of some
business”
Partnership act sec. 4:
“partnership is the relation between persons who have agreed to share the profits of a business
carried on by all or any on of them acting for all”

6. CHARACTERISTICS OF PARTNERSHIP
The following are characteristics or features of a partnership:
1. Legal Entity
A partnership has no separate legal entity apart from its members. It means that the
partnership and partners are not separate from each other’s. The rights and liabilities of the
partnership firm are considered the rights and liabilities of the partners. If any partner dies,
retires or become insane, the partnership comes to an end.
2. Agreement
A partnership is the result of an agreement between two or more persons. An agreement
may be written or oral. The person who is competent to contract can form a partnership. Upon
death of a father who was partner in affirm, the son can claim share in the firm’s assets but
cannot become a partner unless he enters into an agreement with the other partners
3. Numbers of partners
At least 2 persons are required to form a partnership. According to companies act, 2017
a partnership consisting of more than 20 persons cannot be formed. However, a partnership
can be formed to carry on practice as lawyer, accountants and other professionals. In case of
partnership among members of a joint family, the maximum number of members may be more
than 20.
4. Purpose of partnership
In order to form a partnership, the partners must agree to run a certain business. If the
purpose of partnership is to carry on something others than business, it cannot be called a
partnership.
5. Sharing of profits
The agreement between partners must be to share the profits of the business. The profit
is distributed among partners according to the agreement. If there is no agreement regarding

7. the distribution of profit, it is equally distributed among the partners. The partners share the
loss according to the agreed ratio.
FIRM’S NAME
The name under which partners carry on their business is called the firm’s name. the partners can
choose any name for the firm according to the following rules: (sec. 58)
1. Name must not be identical or similar to the name of an existing firm.
2. Name must not contain the word government, Jinnah, Quaid-e-Azam or words showing
approval or patronage of the Federal Government or any Provisional Government, without
consent of the provincial government.
3. Name must not contain the name of United Nation (UN) or abbreviation off its subsidiary body
without sanction of the Secretary General of UN.
4. Name must not contain the name OF THE World Health Organization (WHO) or abbreviation
without sanction of the Director General of WHO.
5. Name must not contain any word which may be declared by the provincial government as
undesirable.
TYPES OF PARTNERSHIP
The following are two types of partnership
1. Partnership at will:
Usually when a partnership is created, it is upon the partners to decide till when they want
the partnership to exist. Hence, whenever a partnership is created without a specific time limit of
its closure, its termed as partnership at will. The dissolution of partnership is the matter of mutual
consideration when need arises and is not pre-decided. It is upon the partners to decide mutually
till what period of time they want the partnership to be functioning.
2. Particular partnership
This is the type of partnership that is created with an aim to carry out a specific undertaking.
When partnership is created for a project of a temporary contract-based work or a specific business
only, they are termed as particular partnerships. Once the objective of the business is achieved or

8. the act for which the partnership was created in fulfilled, the partnership will be dissolved.
However, the partners have the discretion to come to an agreement in case they wish to continue
the said partnership. But in the absence of this, the partnership ends when the task is complete.
For example: A partnership for the construction of a building or partnership for producing a
movie.
PARTNERSHIP DEED
Partnership is an agreement between persons to carry on a business. The agreement entered into
between partners may be either oral or written. But it is always desirable to have a written
agreement so as to avoid misunderstandings and unnecessary litigations in future. When the
agreement is in written form, it is called ‘Partnership Deed.
And it generally contains the following provisions.
1. The name of the firm.
2. The names and addresses of all partners.
3. The nature of business of the firm.
4. The town and place where the business will be carried on.
5. The amount of capital invested by each partner.
6. The duration of the partnership.
7. The ratio of sharing profit and losses.
8. The rate of interest, if any, allowed on capital.
9. The rate of interest on loans given by partners to firm.
10. The amount a partner can withdraw from the firm.
11. The rate of interest to be changed on drawing.
12. The amount of salary or commission payable to any partner for just services.
13. The circumstance under which a firm shall dissolve.
14. The rights, duties, and liabilities of partners.
15. The method of valuation of goodwill.
16.The rules of regarding retirement, death and admission of a partner.
17. Power of a partner to retire after giving notice.
18. The restrictions on partners, if any.

9. KINDS OF PARTNERS
The different kinds of Partners that are found in Partnership Firms are as follows:
1. Active or managing partner:
A person who takes active interest in the conduct and management of the business of the
firm is known as active or managing partner. He carries onbusiness onbehalf of the other partners.
If he wants to retire, he has to give a public notice of his retirement; otherwise he will continue to
be liable for the acts of the firm.
2. Sleeping partner:
A sleeping partner is a partner who ‘sleeps’, that is, he does not take active part in the
management of the business. Such a partner only contributes to the share capital of the firm, is
bound by the activities of other partners, and shares the profits and losses of the business. A
sleeping partner, unlike an active partner, is not required to give a public notice of his retirement.
As such, he will not be liable to third parties for the acts done after his retirement.
3. Nominal partner:
A nominal partner is one who does not have any real interest in the business but lends his
name to the firm, without any capital contributions, and doesn’t share the profits of the business.
He also does not usually have a voice in the management of the business of the firm, but he is
liable to outsiders as an actual partner.
4. Secret Partner:
The position of a secret partner lies between active and sleeping partner. His membership
of the firm is kept secret from outsiders. His liability is unlimited and he is liable for the losses of
the business. He can take part in the working of the business
5. Minors partner:
Minor is a person who has not completed 18 year of age. The person who wants to enter
into a partnership must be competent to contract. A minor is not competent to contract, so he
cannot become a partner. But with consent of all partners, he may be admitted to the benefits of

10. partnership by an agreement with his guardian, the following points are important in this regard:
[Sec. 30]
a) He has a right to receive his agreed share of property and profits of the firms.
b) He can inspect and take copies of accounts but not the books of the firms as they
may contain business secrets.
c) His liability is limited up to his share in the firm. He is not personally liable for
the debts.
d) He cannot take a part in management of the business.
REGISTRATION OF FIRM:
Registration of partnership is not compulsory. However, the partners may get the firm registered.
The procedure of registration is as follow:
1. Submission of application
An application in the prescribed form with the prescribed fee is submitted to register.
The application must be signed by all the partners. The application must contain the following
particulars: [Sec. 58]
a) The name of the firm.
b) The name and the addresses of partners.
c) The date when the partner joined the firm.
d) The name of branches. if any.
e) The duration of the business.
f) The main place or addresses of a business.
2. Certification
Registrar examines the application and if he satisfied with the application, he registers
the firm and enters its name in the registers of firms. Then he issues a certificate of registration.
[Sec. 59]

11. 3. Change of particulars
If any changes take place in any of the particulars given above, the registrar must be
informed. He will include the necessary changes in the register of firms. [Sec. 60-63]
4. False information
A person who provide false information to the registrar shall be punishable with
imprisonment, which may extend to three months, or with fine, or with both [Sec. 70]
RIGHT OF PARTNERS
Partners of a firm have certain right over their business. These rights bring them many benefits.
1. Management of business:
Partner possesses the right to participate in management irrespective of their capital
investment or profit- sharing ratio. Every partner can take a part in the conduct of business.
However, it is not necessary that every partner should participate in the conduct of business. But
the right of participation should be available to each partner. [Sec. 12 (a)]
2. Expression of opinion:
The ordinary matter of firms may be decided by majority of the partners. And every partner
has a right to express his opinion to decide any matter. [Sec. 12 (c)]
3. Inspection of books:
Partner’s has a right to inspect and take copies of books of the firm. However, a minor
partner can inspect the account but not the books. [Sec. 12 (d)]
4. Sharing to profits:
Partner’s has a right to share equally in profits they earned and is liable to contribute equally
to losses suffered by the firm. [Sec. 13 (B)]

12. 5. Interest on capital:
Every partner can take interest on capital contributed by him. The interest shall be paid out
only of the profits. [Sec. 13 (c)]
6. Rights to give consent
Every partner has a right to prevent the introduction of new partner unless he consents to
that. (sec 31)
7. Right to enforce
Every partner has a right to see that the property of the firm is used only for the purpose
of the partnership.
DUTIES OF PARTNERS:
According to partnership act following are the duties of partners:
 Duty to carry on business
 Duty to be just faithful
 Duty to render account
 Duty to provide information
 Duty to indemnity
 Duty to attend diligence
 Duty to share losses
 Duty to indemnity for willingness
 Duty to use firm’s property for firm
 Duty to account for personal profits
 Duty to account for profits
 Duty to be liable individually &Jointly
 Duty not to transfer rights

13. 1. Duty to carry on business
Every partner is bound to carry on the business of the firm to the common advantage.
He must use his knowledge and skill for the benefit of the firm and not for his personal gain.
(sec. 9)
2. Duty to be just faithful
It is duty of every partner that he should be just and faithful to the other partners. He must
observe utmost good faith towards other partners of the firm. (sec. 9)
3. Duty to render accounts
Every partner must render true and proper accounts to his co-partners. It means
that each partner must be ready to explain the accounts of the firm and produce vouchers
in supports of entries(sec.9)
4. Duty to provide information
Every partner must give full information about the firm to his co-partners. A partner
must not conceal any information concerning the firm from other partners (sec.9)
5. Duty to indemnity
Every partner is bound to indemnity the firm for any loss caused to it by his fraud in the
conduct of the business of the firm. But where the partner acts bonafide, the loss caused is
borne by the firm. (sec. 10)
6. Duty to attend diligence
It is the duty of every partners to attend diligence to his duty in the conduct of the
business of the firm. He must use his knowledge and skill to the common advantage of the
partners. (sec. 12(b))
7. Duty to share losses
Every partner shall bear the loss equally borne by the firm irrespective of their capital
contribution. (sec. 13(b))

14. 8. Duty to indemnity for willful neglect
Every partner shall indemnity the firm for any loss caused to it by his willful neglect
in the conduct of the business of the firm. (sec. 13(f))
9. Duty to use firm’s property for firm
It is the duty of every partner of the firm to hold and use the property of the firm only
for the purpose of the business of the firm. (sec. 15)
10. Duty to account for personal profits
If a partner gets any benefit without the consent of other partners from partnership
business, he must account for it and pay to the firm. (sec. 16(a))
LIABILITIES OF PARTNERS
The following are the liabilities of a partner to third parties:
I. Liability of a partner for acts of the firm:
Every partner is jointly and severally liable for all acts of the firm done while he is a partner.
Because of this liability, the creditor of the firm can sue all the partners jointly or individually.
ii. Liability of the firm for wrongful act of a partner:
If any loss or injury is caused to any third party or any penalty is imposed because of
wrongful act or omission of a partner, the firm is liable to the same extent as the partner. However,
the partner must act in the ordinary course of business of the firm or with authority of his partners.
iii. Liability of the firm for misutilization by partners:
Where a partner acting within his apparent authority receives money or property from a
third party and mis utilize it or a firm receives money or property from a third party in the course
of its business and any of the partners mis utilizes such money or property, then the firm is liable
to make good the loss.

15. iv. Liability of an incoming partner:
An incoming partner is liable for the debts and acts of the firm from the date of his
admission into the firm. However, the incoming partner may agree to be liable for debts prior to
his admission. Such agreeing will not empower the prior creditor to sue the incoming partner. He
will be liable only to the other co-partners.
v. Liability of a retiring partner:
A retiring partner is liable for the acts of the firm done before his retirement. But a retiring
partner may not be liable for the debts incurred before his retirement if an agreement is reached
between the third parties and the remaining partners of the firm discharging the retiring partner
from all liabilities. After retirement the retiring partner shall be liable unless a public notice of his
retirement is given. No such notice is required in case of retirement of a sleeping or dormant
partner.
DISSOLUTION OF FIRM
The dissolution of a partnership is different from dissolution of a firm. When one partner
dies retire or becomes insolvent but the remaining partners continue the business, it is called
dissolution of the partnership.
When the relationship between all the partners comes to an end and the business is closed,
it is called dissolution of partnership, but the dissolution of the partnership may or may not include
the:
GROUND OF DISSOLUTION OF FIRM
A firm may be dissolved on any one of the following grounds:
A. Dissolution by agreement
A partnership firm can be dissolved by an agreement among all the partners. Section
40 of Indian Partnership Act, 1932 allows the dissolution of a partnership firm if all the partners
agree to dissolve it. Partnership concern is created by agreement and similarly it can be
dissolved by agreement. This type of dissolution is known as voluntary dissolution.

16. B. Compulsory dissolution
Compulsory dissolution takes place under following circumstances:
a) When all partners are declares insolvent.
b) When all except one of the partners are declares insolvent.
c) When the business of the firm
C. Contingent dissolution
Subject to contract between the partners, a firm is dissolved on the happening of the
following events: (sec.42)
a) On the expiry of fixed period for which the firm was formed.
b) On the completion of the project for which the firm was formed.
c) On the death of a partner.
d) On the insolvency of any partner.
e) On the resignation of a partner.
D. Dissolutionby notice
When the partnership is at will, the firm may be dissolved by any partner giving notice in
writing to all the other partners of his intention to dissolve the firm. A notice of dissolution
once given cannot be withdrawn without the consent of other partners. The firm is dissolved
from the date mentioned in the notice. If no date is mentioned, it dissolves from the date of the
communication of the notice. (sec43)
E. Dissolution by court
The court decides about the dissolution of a firm if there is a difference of opinion
between the partners regarding the dissolution. For example, when
a partner has become insane, same of the partners are willing to continue while others are
insisting on the dissolution of firm. The court may dissolve a firm on any of the following
ground: (sec 44)
a) Insanity
When a person becomes insane, the court may allow dissolution

17. b) Permanent incapacity
When a partner becomes permanently incapable of performing his duties as a
partner the court may order dissolution of a firm.
c) Misconduct
When a partner is guilty of misconduct which is likely to adversely affect the
reputation of the firm, the court may dissolve the firm. For example, a partner travels
without ticket.
d) Breach of agreement
When a partner commits breach of agreement relating to the management of the
affairs of the firm, the court may dissolve the firm. Example, taking away the books of
accounts, using firm’s money for private debts etc.
e) Transfer of interest
When a partner transfers the whole of his interest in the firm to a third party without
the consent of the partners, the court may dissolve the firm.
f) Continuous losses
When the business of a firm cannot be carried on except at a loss, the court may
order for dissolution of the firm.
g) Just and equitable
When on any other ground the court considers it just and equitable that the firm
should be dissolve the court may dissolve the firm. Example, if parties are not on
speaking terms with each other. (sec.44)

18. CONCLUSION
Partnership can be a successful way to run a business, but it can also destroy friendships. Picking
the right partner is a vital step in the strategic planning of a business. All partners should enter into
a general contract with all expectations clearly stated in writing for their own protection as well as
the protection of the partner(s) (Meadows, 2016).
“Great thing in business are never done by one person. They’re by a team of people”